A public utility intends to buy a turbine as part of an


A public utility intends to buy a turbine as part of an expansion plan and must now decide on the number of spare parts to order. One part, no.X135, can be purchased for $100 each. Additional carrying costs of each spare part is estimated to be $145 dollars over the life of the turbine. Un-used spare part has no salvage value. A stockout would cost roughly $8000 due to downtime, order, and special purchase factors. Historical records based on the performance of similar equipment operating under similar conditions suggest that demand for spare parts will approximate the distribution listed in the table below (non-normal). a. What is the optimal number of spares to order? b. What is the actual service level as a result of a?

Request for Solution File

Ask an Expert for Answer!!
Operation Management: A public utility intends to buy a turbine as part of an
Reference No:- TGS02585331

Expected delivery within 24 Hours